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Inclusive Economies

Promoting inclusive economies has become an important theme in international policy discussions, but there remain major gaps in our understanding of the components and determinants of greater economic inclusion. The overall goal of this project is to help contribute to developing a more comprehensive and coherent approach to promoting the development of more inclusive economies. Our starting point for this particular inquiry is the framework developed by the Rockefeller Foundation, which defines an inclusive economy as one that “expands opportunities for more broadly shared prosperity, especially for those facing the greatest barriers to advancing their well-being”, and argues that there are five critical characteristics that define an inclusive economy: equity, participation, growth, sustainability, and stability. The first phase of this project saw the development of an indicator framework that tracks progress towards greater economic inclusion along these 5 dimensions with subsequent 15 sub-categories and 57 separate indicators (a more comprehensive review of the framework can be found here). In our recent work we extend this analysis to sub-national contexts, focusing on three key case studies—rural-urban connections in South Africa, urban development in Colombia and rural development in India—while also incorporating insights from our similar work in the United States. While we include some empirical analysis of patterns of inclusion in our case studies (in companion reports), the primary purpose here is conceptual and methodological, not empirical. Through this work we hope to help understanding along three key questions, listed below, with some preliminary cross-cutting conclusions.

1. What is an Inclusive Economy?

Incorporating insights from ecological economics, theories of social well-being, and concepts of pro-poor and inclusive growth, the Rockefeller Foundation defines an inclusive economy as one in which there is expanded opportunity for more broadly shared prosperity, especially for those facing the greatest barriers to advancing their well-being. In developing this understanding, the Foundation argues that inclusive economies have five broad inter-related characteristics: they are equitable, participatory, growing, sustainable and stable.

2. How can we measure an Inclusive Economy?

The multi-dimensional framework takes the definition of these five broad dimensions and identifies a comprehensive list of 15 sub-categories and 57 indicators for measuring economic inclusion at a national and sub-national level. Recognizing that there are cross-cutting issues across the five core thematic areas, it is important to not think of these as independent categories but rather interlinked dimensions that through feedback loops generate virtuous (or vicious) cycles. Where possible these indicators are disaggregated by different population groups, such as gender, race, and class to better understand the depths of inclusion (or exclusion) and the drivers that help shape those outcomes.

3. How can we get a more Inclusive Economy?

This framework helps ground the conversation on inclusive economies. We recognize that indicator projects that work best are those embedded in a theory of change, for they not only provide a common language for understanding inclusion but also help stir transformational action. The processes of exclusion are complex and arise at different scales and for different reasons. Strategies to address these conditions thus can also be thought of at varying levels—i.e., projects, policies and power. Projects can demonstrate what is possible and generate change at a community level. Policies can make projects and their impact widespread. While, power is the required force needed to generate policies and ensure that they are implemented and enforced fairly.